Legal Issues Related to Wellness Programs

Legal Issues Related
To Wellness Programs
Kevin D. Kelly
(312) 443-0217
[email protected]
Introduction And Overview
• Many legal considerations when implementing a
wellness program:
–
–
–
–
HIPAA
ADA
GINA
State law concerns
• The law related to wellness programs isn’t welldeveloped
– There are a number of areas of uncertainty at present
– EEOC is becoming increasingly focused on wellness
programs given the greater prevalence of these
programs amongst employers
The Range of
Wellness Programs
• Three levels of wellness programs
1. Purely voluntary programs with limited scope
• Example: providing a fitness center on site for any employee who
wants to use it
2. Participatory programs (for which all employees
regardless of health can participate) that reward
employees for engaging in the program
• Examples: paying for employee gym memberships or paying a
bonus to all employees who receive a preventive health screening
3. Detailed programs that reward or penalize employees
depending on whether or not they actually attain certain
health-related goals (health-contingent programs)
• The higher the level of your program, the more
legal issues arise
HIPAA
• Regulates participatory programs and
programs that are health-contingent (levels 2
and 3 from previous slide)
• If you want to implement a wellness program
that has real carrots and sticks (as opposed to
a purely voluntary program), you must comply
with HIPAA
Participatory Programs
• Compliance with HIPAA simply requires that
you offer the program to all similarly situated
employees
• Must remain distinct from a health-contingent
program
– Rewards are solely based on participation, not
outcome
– Exercise programs are not participatory –
because some people might not be able to
participate due to a health condition
The Five-Part HIPAA Test For HealthContingent Programs
• Distinction in the test between activity-only
programs (e.g., exercise program) and
outcome-based programs (e.g., rewarding
those with healthy cholesterol or blood
pressure)
• The test has five elements
The Five-Part HIPAA Test
(continued)
1. The reward (e.g., health insurance premium
rate reduction) is capped at no more than 30%
of the total cost of coverage (which includes
employer and employee portion)
– Cap is 20% until January 1, 2014
– An additional 20% is available (after January 1,
2014) for programs designed to prevent or reduce
tobacco use (50% total cap)
– Percentage cap can be based on the cost of family
coverage (as opposed to employee-only coverage) if
the wellness program covers the employee’s family
members
The Five-Part HIPAA Test
(continued)
2. The program must be reasonably designed
to promote health and prevent disease
– Relatively easy to meet this requirement
3. Employees must have an opportunity to
qualify for the award at least once per year
The Five-Part HIPAA Test
(continued)
4. The program must be available to all similarly
situated employees
– To meet this requirement:
•
For an activity program, you must provide a reasonable
alternative standard or waiver for anyone for whom it is
unreasonably difficult or medically inadvisable due to a
medical condition to meet the standard
–
•
Can require medical proof
For an outcome-based program, you must offer an
alternative standard or waiver to anyone who fails to meet
the initial target requirement regardless of why the person
failed to meet the target
–
Cannot require medical proof
The Five-Part HIPAA Test
(continued)
5. The program must prominently disclose the
alternative standard or waiver
Reasonable Alternative
Standards/Waivers
• The most common source of problems for
employers
• Cannot simply say that employees must attain
a health goal to qualify for reduced rates
• Concrete examples
– Tobacco usage
– Healthy blood pressure/cholesterol
– Participate in an exercise class
ADA
• Prohibits discrimination against individuals
with disabilities
• With the expanded definition of “disability”
under the ADAAA, many people can claim
some form of disability
– My rule: everyone over the age of 40 has a
disability
ADA
• Two ways in which the ADA affects wellness
programs:
1. Any differentiation between employees based
on health factors is potentially disability
discrimination (e.g., providing discounted health
insurance to those who are healthy and nondisabled)
2. Wellness programs can violate the ADA medical
inquiry rules (which are stringent)
• Law in this area is undeveloped and rapidly
changing
ADA – Discrimination
in Health Insurance Rates
• ADA prohibits discrimination in employee
benefits (as well as other terms and
conditions of employment)
• But, the ADA contains a “safe harbor”
provision allowing health plans to charge
different premiums based on health factors
• Seff v. Broward County – 11th Circuit
expressly applies the safe harbor to a
wellness program
ADA Safe Harbor
• Requirements
– Must be able to show that the health factors (for
which you are charging increased rates) actually
result in increased medical costs
• You can charge those with certain medical conditions more
only if those conditions impose greater medical costs on
your plan
– Must treat all similar conditions in the same way
• Cannot single out particular conditions for higher rates
• Example: If you charge more for those with high blood
pressure, you must also charge more for those with
conditions that impose the same level of increased medical
cost
Compliance With The
Safe Harbor
• Technical compliance would require detailed
medical information regarding how certain
conditions affect total health insurance costs
• The good news: by complying with the HIPAA
reasonable alternative standard/waiver
requirements, you likely avoid any issues with
the ADA safe harbor
– No one with a disability can complain that they
couldn’t achieve the standard for reduced rates
– EEOC: reasonable alternative standard is likely
necessary as a “reasonable accommodation” under
the ADA anyway
ADA Medical Inquiry Rules
• Once an employee is hired, an employer can
inquire about an employee’s medical conditions
only where the inquiry is “job-related and
consistent with business necessity”
• The problem: wellness programs necessarily
make inquiries into employee medical conditions
– For example, to determine if the employee has
attained the wellness standard or target
• Are wellness programs “job-related and
consistent with business necessity”?
The EEOC Position On Wellness
Programs and Medical Inquiries
• EEOC has not kept up with the increasing
prevalence of wellness programs
• Existing EEOC guidance:
– Medical inquiries as part of a purely “voluntary”
wellness program are permissible
• Little guidance on what constitutes a “voluntary”
program
– Employer cannot require participation or penalize
those who do not participate
• Cannot terminate those who do not participate
– Open question: is a reward offered to those who
participate a penalty on those who do not participate?
GINA
• Prohibits discrimination based on genetic
information and prohibits inquiries into the
genetic history of employees
• Implication for wellness programs
– Health screenings and other questionnaires
related to wellness programs sometimes involve
inquiries into an employee’s family medical history
– You should ensure that your wellness program
doesn’t include any genetic history inquiries
Use of Third Parties
For Medical Inquiries
• Can you escape potential liability for ADA or
GINA inquiries simply by having a third party
conduct the inquiries without disclosing the
detailed results to you as the employer?
– Not clear
– Certainly better to keep distant from the results of
these inquiries, but…
– If you require an employee to respond to these
inquiries in order to receive a wellness-related
reward, you are still obligating an employee to
respond to inquiries from an entity that is your agent
• This could still violate the ADA or GINA regardless of
whether or not you actually view the response to the inquiry
State Law Issues
• State statutes prohibiting discrimination based on
the use of lawful products or lawful activities
conducted outside of work
– Indiana: tobacco use statute (specifically authorizes
financial incentives intended to reduce tobacco use
related to health benefits)
– Examples of impact on wellness programs
• Tobacco usage
• Eating foods high in fat and cholesterol
– Probably preempted by ERISA (which exclusively
governs employee benefits like health insurance), but
there has been almost no litigation on this issue
State Law Issues
• Liability for injuries at an employer’s gym or
as part of an employer-sponsored fitness
program
– Very important to obtain a waiver (like you would
sign at any gym) acknowledging the risks and
waiving any liability for injuries sustained as part
of the program
Other Laws That Could Be
Implicated By Wellness Programs
• Title VII – religious discrimination
– Religious objections to health screening or certain
types of medical treatment
• Title VII – race discrimination
– Certain races have higher rates of certain health
problems
– Disparate impact claim potential
• ADEA – older workers may have difficulty
participating in certain activities
Practical Considerations
• You won’t convince employees that a wellness
program is for their benefit (as opposed to simply
saving the company money) if the company doesn’t
have robust compliance with other laws pertaining to
employee health
– ADA reasonable accommodation
– FMLA leave
• Effective communication regarding the program can
make a difference in how it’s received by employees
– Employees are often hostile to health-based intrusions for
privacy reasons
– Resistance to being “told what to do”
• Are outcome-based programs worth it because of the
necessity of waivers/alternatives?
Questions